Sovereign Wealth Funds in Africa: Taking Stock and Looking Forward

The paper analyzes the role of sovereign wealth funds (SWFs) in Africa, focusing on their ability to manage resource revenues and combat the 'resource curse'. Through case studies of Angola, Botswana, Ghana, and Nigeria, it finds that while some funds have strong legal frameworks, their success is heavily dependent on the country's overarching fiscal culture and the presence of independent oversight. The author argues that SWFs cannot operate in isolation and must be integrated into broader public financial management reforms to prevent political misuse and ensure long-term sustainability.

• The effectiveness of sovereign wealth funds (SWFs) is heavily influenced by a country's existing fiscal culture; funds in environments with low high-level commitment to fiscal discipline are often designed with weak rules or limited influence to facilitate political spending.
• In Angola, the Fundo Soberano de Angola (FSDEA) suffered from limited structural independence and vague mandates, which allowed for 'crony capitalism' and the appointment of an asset manager without competitive tender, leading to investments in projects where the manager had personal interests.
• Botswana's Pula Fund has operated prudently and contributed to the country's high credit rating (A2 by Moody's), despite having few explicit withdrawal regulations, because it is supported by a national culture of fiscal conservatism.
• Ghana's experience illustrates the 'pre-source curse', where the anticipation of future oil revenues led to unsustainable borrowing and spending before extraction even began, neutralising the benefits of its well-regulated Petroleum Funds.
• Nigeria's Sovereign Investment Authority (NSIA) represents a significant improvement over previous mechanisms like the Excess Crude Account (ECA) due to its merit-based appointments of private sector professionals and its legally independent structure.
• The paper identifies three primary SWF mandates: stabilisation (countercyclical fiscal policy), savings/sterilisation (inter-generational equity and curbing Dutch disease), and domestic investment (alleviating capital constraints).
• To prevent political raiding and misuse, the author recommends that SWFs be designed with robust fiscal rules, targeted investment mandates, and independent accountability mechanisms, such as the Public Interest and Accountability Committee (PIAC) in Ghana.
• SWFs should not be treated as isolated mechanisms but must be integrated into broader public financial management (PFM) reforms, including debt ceilings and balanced budget rules, to avoid the paradox of saving in a fund while borrowing unsustainably.

APA

MARKOWITZ, C. (2020). Sovereign Wealth Funds in Africa: Taking Stock and Looking Forward. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2020/02/Occasional-Paper-304-markowitz.pdf

Chicago

MARKOWITZ, CHELSEA. Sovereign Wealth Funds in Africa: Taking Stock and Looking Forward. South African Institute of International Affairs, 2020. https://saiia.org.za/wp-content/uploads/2020/02/Occasional-Paper-304-markowitz.pdf.

Wikipedia

{{cite report |last1=MARKOWITZ |first1=CHELSEA |title=Sovereign Wealth Funds in Africa: Taking Stock and Looking Forward |publisher=South African Institute of International Affairs |date=January 2020 |url=https://saiia.org.za/wp-content/uploads/2020/02/Occasional-Paper-304-markowitz.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{markowitz2020sovereign, author = {MARKOWITZ, CHELSEA}, title = {{Sovereign Wealth Funds in Africa: Taking Stock and Looking Forward}}, institution = {South African Institute of International Affairs}, year = {2020}, month = jan, url = {https://saiia.org.za/wp-content/uploads/2020/02/Occasional-Paper-304-markowitz.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }